US Dollar Forecast: AUD/USD Poised for Test of 50-Day SMA Ahead of Fed

Australian Dollar Outlook: AUD/USD

AUD/USD stages a three-day rally as Australia’s Retail Sales report shows a larger-than-expected rise in September, and the Federal Reserve interest rate decision may fuel the recent advance in the exchange rate as the central bank is expected to keep US interest rates on hold.

US Dollar Forecast: AUD/USD Poised for Test of 50-Day SMA Ahead of Fed

AUD/USD approaches the 50-Day SMA (0.6394) as it extends the rebound from the monthly low (0.6270), and it remains to be seen if the exchange rate will respond to the negative slope in the moving average to mirror the price action from earlier this month.

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As a result, the opening range for November is in focus for AUD/USD as it carves a series of higher highs and lows, and the exchange rate may further retrace the decline from the monthly low (0.6445) as the Federal Open Market Committee (FOMC) appears to be at or nearing the end of its hiking-cycle.

US Economic Calendar

FOREX.com Economic Calendar

In turn, a growing number of Fed officials may rule out a more restrictive policy as ‘various participants noted downside risks to economic activity,’ and the US Dollar my face headwinds should the FOMC shows a greater willingness to retain a wait-and-see approach over the coming months.

Nevertheless, the FOMC may continue to strike a hawkish forward guidance as ‘a majority of participants judged that one more increase in the target federal funds rate at a future meeting would likely be appropriate,’ and AUD/USD may struggle to retain the advance from the yearly low (0.6270) should Chairman Jerome Powell and Co. prepare US households and businesses for another rate-hike.

With that said, AUD/USD may further retrace the decline from the monthly high (0.6445) as the FOMC is expected to stay on hold, but the exchange rate may track the negative slope in the 50-Day SMA (0.6394) if it stages another failed attempt to close above the moving average.

AUD/USD Price Chart – Daily

Chart Prepared by David Song, Strategist; AUD/USD on TradingView

• AUD/USD stages a three-day rally after failing to defend the November 2022 low (0.6272), with the monthly opening range in focus as the exchange rate carves a series of higher highs and lows.
• A move above the 0.6380 (78.6% Fibonacci retracement) to 0.6410 (50% Fibonacci extension) region brings the monthly high (0.6445) on the radar, with the next area of interest coming in around the September high (0.6522).
• However, AUD/USD may track the negative slope in the 50-Day SMA (0.6394) if it fails to close above the moving average, with a break/close below 0.6240 (61.8% Fibonacci extension) opening up the 2022 low (0.6170)

Additional Market Outlooks

US Dollar Forecast: USD/JPY Faces BoJ and Fed Rate Decisions

US Dollar Forecast: EUR/USD Post-ECB Drop Brings Test of Monthly Low

--- Written by David Song, Strategist

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